A stock has a market value of $36.10 a share.The $35 call option is priced at $1.48.The intrinsic value of this option is ________,and the time value is ________.

Question

Quizplus · Accepted Answer

The intrinsic value of the option is the difference between the market value of the stock and the strike price of the option. In this case, the strike price is $35 and the market value of the stock is $36.10, so the intrinsic value is $1.10.

The time value is the difference between the option price and the intrinsic value. In this case, the option price is $1.48 and the intrinsic value is $1.10, so the time value is $.38.

Therefore, the correct answer is choice A, with an intrinsic value of $1.10 and a time value of $.38.

A Stock Has a Market Value of $36